The Housing Bubble

ECB says it will buy Italian and Spanish debt and gooses worldwide markets. Watched Hong Kong’s market crater crawl back from over 5% down to only 2.03%. Europe’s losses controlled at least at the open.

CarrieAnne, 4 am EDT

FRANKFURT (MarketWatch) — The yield on 10-year Italian government bonds plunged 43 basis points on Monday to 5.57%, while the 10-year Spanish yield /quotes/zigman/4869131 ES:10YR_ESP -14.08% dropped nearly 65 basis points to 5.39%, according to FactSet Research data, after the European Central Bank late Sunday indicated it would use its bond-buying program to purchase Italian and Spanish debt. The move is seen as crucial to helping arrest a sharp rise in borrowing costs that has threatened to push Italy, the euro-zone’s third-largest economy, and Spain, its fourth-largest, toward default.

Market Pulse Archives

Aug. 8, 2011, 3:24 a.m. EDT

http://www.marketwatch.com/story/italy-spain-yields-plunge-after-ecb-signals-buys-2011-08-08

Keep over regulating and the good jobs will be forced to Bhopal….

DuPont to yank herbicide blamed for killing trees

DOVER, Del. (AP) — The DuPont Co. is halting sales of a new herbicide that has been blamed in several lawsuits for damaging trees in many parts of the country.

The company sent a letter to distributors on Thursday informing them that Dupont was implementing a voluntary suspension of the sales of Imprelis and working on a product return and refund program.

The letter was sent one day after U.S. Environmental Protection Agency officials wrote DuPont with concerns that it may have misbranded the herbicide because label directions and warnings are inadequate to protect non-target plant species, and that DuPont was asserting that study data on Imprelis was confidential business information that should not be disclosed to the public.

“EPA is concerned about the sweeping nature of DuPont’s assertion of confidentiality and is evaluating whether these studies warrant such a claim under the law,” division director Abraham Ferdas wrote DuPont CEO Ellen Kullman.

http://finance.yahoo.com/news/DuPont-to-yank-herbicide-apf-593965193.html?x=0&sec=topStories&pos=6&asset=&ccode=

Bubble bubble toil and trouble….

Consumer borrowing up in June by most in 4 years
Borrowing jumped $15.5B in June; Americans lean on credit cards and loans as economy struggles

The Federal Reserve said Friday that consumers increased their borrowing by $15.5 billion in June. That’s the largest one-month gain since August 2007. And it is three times the amount that consumers borrowed in May.

The category that measures credit card use increased by $5.2 billion — the most for a single month since March 2008 and only the third gain since the financial crisis. A category that includes auto loans rose by $10.3 billion, the most since February.

http://finance.yahoo.com/news/Consumer-borrowing-up-in-June-apf-3022205609.html?x=0&sec=topStories&pos=7&asset=&ccode=

Just realized my post on housing from the mountains of southern Poland is a bit more complicated. It’s not really bubbly here in a housing bubble sense…because they don’t appear to be selling them to each other. A nice new one is being built next to the 100-200 year old shack and is owned by the same family. The question is where is that new money coming from? The member of the family that’s been working in western Europe the last few years building their bubbly houses?

Speaking of working, these people are physically amazing. They walk everywhere, and do their farm work mostly by hand with some help from a creaky old tractor here and there. A skinny little 19-20yo kid I’ve been working with on some genealogy work here just took third in a local mountain biking competition where he rode 8km with the uphill sections totaling over 2000m vertical in about 24 minutes. I’m sure that some momentum from downhill sections helped but that blows me away.

Turbo Tax Timmy: S&P showed terrible judgement

WASHINGTON (AP) — Treasury Secretary Timothy Geithner says the credit rating agency Standard & Poor’s showed “terrible judgment” in lowering the U.S. government’s credit rating.

Geithner said the agency’s decision showed a “stunning lack of knowledge” about the basic math used to develop the federal budget.

The “terrible” judgement they showed was waiting so long!

ITEM: Geithner attacks S&P for terrible judgment in downgrading government credit rating

WASHINGTON (AP) — The credit rating agency Standard & Poor’s showed “terrible judgment” in lowering the U.S. government’s credit rating, Treasury Secretary Timothy Geithner said Sunday.

“They’ve handled themselves very poorly. And they’ve shown a stunning lack of knowledge about the basic U.S. fiscal budget math,” Geithner said in his first public comments about the credit rating decision.

Interviewed on CNBC, Geither said that U.S. Treasury securities were just as safe now as they were before S&P announced its downgrade. He predicted that China and investors would remain strong purchasers of U.S. government debt.

Republicans have blamed President Barack Obama for the first-ever downgrade of the government’s credit rating.

But Geithner said Congress owns the credit rating because the Constitution gives Congress the power to tax and spend.

Late Friday, S&P announced it was lowering its rating for U.S. debt one notch from AAA to AA+.

QE3 this week?

Au @ $1700.00 can’t wait to hear the same old voices howl “bubble” They don’t get it, can’t get it and will never get it! They just can’t understand why it’s happening, this ain’t the 80’s. I’ll carry on laughing when it crosses the $2000.00 mark. While the decade+ old bubble callers try and convince themselves over and over that gold is a fools investment/insurance policy.

The next housing shock
(CBS News)

Home prices have been falling for months, sending us into a second housing shock. Home values are almost down to what they were back in 2002. A key factor bringing down prices - and holding back the recovery - is the huge number of foreclosed houses.

Many of them are stuck on the market for a reason that you wouldn’t expect: banks can’t find the ownership documents. It’s bizarre, but it turns out that Wall Street cut corners when it created those mortgage-backed investments that triggered the financial collapse.

As we reported earlier this year, now that banks want to evict people, they’re discovering that often the legal documents behind the mortgages simply aren’t there. Caught in a jam of their own making, some companies appear to be resorting to forgery and phony paperwork to throw people, down on their luck, out of their homes.

Who really owns your mortgage?

Scott Pelley explains a bizarre aftershock of the U.S. financial collapse: An epidemic of forged and missing mortgage documents.

In the 1930s we had breadlines; venture out before dawn in America today and you’ll find mortgage lines. This past January in Los Angeles, 37,000 homeowners facing foreclosure showed up to an event to beg their bank for lower payments on their mortgage. Some people even slept on the sidewalk to get in line.

So many in the country are desperate now that they have to meet in convention centers coast to coast.

In February in Miami, 12,000 people showed up to a similar event. The line went down the block and doubled back twice.

Dale DeFreitas lost her job and now fears her home is next. “It’s very emotional because I just think about it. I don’t wanna lose my home. I really don’t,” she told “60 Minutes” correspondent Scott Pelley.

“It’s your American dream,” he remarked.

“It was. And still is,” she replied.

These convention center events are put on by the non-profit Neighborhood Assistance Corporation of America, which helps people figure what they can afford, and then walks them across the hall to bank representatives to ask for lower payments. More than half will get their mortgages adjusted, but the rest discover that they just can’t keep their home.

For many that’s when the real surprise comes in: these same banks have fouled up all of their own paperwork to a historic degree.

“In my mind this is an absolute, intentional fraud,” Lynn Szymoniak, who is fighting foreclosure, told Pelley.

While trying to save her house, she discovered something we did not know: back when Wall Street was using algorithms and computers to engineer those disastrous mortgage-backed securities, it appears they didn’t want old fashioned paperwork slowing down the profits.

“This was back when it was a white hot fevered pitch to move as many of these as possible,” Pelley remarked.

“Exactly. When you could make a whole lotta money through securitization. And every other aspect of it could be done electronically, you know, key strokes. This was the only piece where somebody was supposed to actually go get documents, transfer the documents from one entity to the other. And it looks very much like they just eliminated that stuff all together,” Szymoniak said.

Szymoniak’s mortgage had been bundled with thousands of others into one of those Wall Street securities traded from investor to investor. When the bank took her to court, it first said it had lost her documents, including the critical assignment of mortgage which transfers ownership. But then, there was a courthouse surprise.

“They found all of your paperwork more than a year after they initially said that they had lost it?” Pelley asked.

“Yes,” she replied.

Asked if that seemed suspicious to her, Szymoniak said, “Yes, absolutely. What do you imagine? It fell behind the file cabinet? Where was all of this? ‘We had it, we own it, we lost it.’ And then more recently, everyone is coming in saying, ‘Hey we found it. Isn’t that wonderful?’”

But what the bank may not have known is that Szymoniak is a lawyer and fraud investigator with a specialty in forged documents. She has trained FBI agents.

Here’s an article on the Mercedes Benz dealership expansion V tried to tell me I was making up:

Romano brothers expand Fayetteville dealership to suit Mercedes Benz

Fayetteville, NY — A decade after moving their Mercedes-Benz dealership from Syracuse’s West Side to Fayetteville, brothers Michael and Joe Romano have finished renovating the shop to suit the German carmaker’s standards.

Everything from the tiles on the floor to the furniture in the offices to the tool boxes in the service bays matches Mercedes specifications. Pointing to the ceiling, Michael Romano says, “every light fixture in this place has been changed to Mercedes-Benz standard.”

The renovations cost “over seven figures,” he said.

The new tool boxes alone cost $68,000, Joe Romano said.

Mercedes wants its dealerships to match, to give customers a higher level of experience, the two said. So they complied, expanding the dealership toward the front with a glass-front showroom. The color schemes in the showroom, the service waiting room and the offices are muted, chosen from a Mercedes-approved palette.

http://www.syracuse.com/news/index.ssf/2011/08/romano_brothers_expand_fayette.html

Today’s houses, bank-owned neighbors:

Here’s a light fixer-upper foreclosure at a low-ballable price in an okay neighborhood:

http://www.zillow.com/homedetails/4723-Boiling-Brook-Pkwy-Rockville-MD-20852/37092882_zpid/#hdp-photo-lightbox

07/07/2011 Listed $250,000
06/07/2004 Sold $10 <– not a typo
08/07/1978 Sold $65,000

1953 3/1.5 on a quarter acre.
Looks like Grandma died in 2004?
Somebody tried to flip in 2005, now in foreclosure.
The kitchen needs a total redo.

And here is a nearly identical house two doors down, just SOLD.

http://www.zillow.com/homedetails/4719-Boiling-Brook-Pkwy-Rockville-MD-20852/37092676_zpid/

04/07/2011 Sold $352,072 <– fraud? There is no way this house would sell for this price, not even in DC.
03/31/2011 Listed for sale $300,000
2004 tax assesment: $212,890

Very good location. But it’s got the Ugliest. Interior. Ever.

Fannie Mae loss widens; asking taxpayers for $2.8B

By MICHELLE CHAPMAN AP Business Writer
August 5, 2011 10:49PM

NEW YORK — Government-controlled mortgage company Fannie Mae said Friday that its second-quarter loss widened as it continues to seek loan modifications to help reduce defaults amid the ongoing difficulties in the housing and mortgage markets.

Fannie Mae also made $2.3 billion in dividend payments to the U.S. Treasury during the period, which reduces the amount it will be asking taxpayers for to $2.8 billion from $5.1 billion.

Fannie’s rescue has been one of the most expensive government bailouts. The amount of money it has received from the Treasury to stay afloat is set to rise to $104.8 billion when accounting for the latest request. Fannie has paid back $14.7 billion to the Treasury in dividends as of the end of June.

http://www.suntimes.com/business/6909877-420/fannie-mae-loss-widens-asking-taxpayers-for-2.8b - -

Democrats seek to pin credit downgrade on tea party

http://www.washingtontimes.com/news/2011/aug/7/democrats-seek-to-pin-credit-downgrade-on-tea-part/

“While continuing to cast doubt on the credibility of Standard & Poor’s, several Democrats on Sunday said there is an even greater culprit in the downgrade of the nation’s credit rating: the tea party.

“I believe this is, without question, the tea party downgrade,” Sen. John F. Kerry, Massachusetts Democrat, said on NBC’s “Meet the Press” on Sunday… David Axelrod, a former senior adviser to President Obama, used the exact same phrase in dubbing the credit rating drop the “tea party downgrade,” as Democrats tried to position themselves as reasonable, pragmatic leaders and conservative Republicans as irresponsible ideologues who caused the downgrade by refusing to accept any new taxes.

That’s exactly the kind of blame game that led Standard & Poor’s, one of three key credit-ratings agencies, to strip the U.S. federal government of its AAA status Friday night and reducing it to AA+ for the first time in the nation’s history.”

———

People in the same political party using the exact same phrase to create a talking point? Oh the horror!!!

Realtors Are Liars®

Where do you put your savings?
ECB is buyer of last and only resort for PIIGS treasuries.
Will the Bernank print more money? Why is gold in a bubble, or isn’t it?
Buying treasuries with freshly printed money is inflationary. This money will quickly find its way into the economy via government spending. On the other hand there are clearly deflationary forces such as defaulting homeloaners and PIIGS countries. Long term I am still not convinced about deflation. No amount of austerity will stop the runaway debt train plus you run the very real risk of insurrection and revolution if you create a desperate unemployed underclass with no gubernmint cheese.
Personally I do not consider fiat money a reliable store of value for my savings. Real estate is subject to punishing property taxes by desperate municipalities plus I really hate being a slum lord. Stocks haven’t gone nowhere in the last 14 years, actually inflation adjusted they’re down. Some pay 5-6% dividends which is nice. Maybe some energy stocks once peak oil starts to bite.
Other than high quality corporate bonds, dividend stocks and PM I don’t see very many places that make for a reliable long term store of value. Do you?

“They’ve handled themselves very poorly. And they’ve shown a stunning lack of knowledge about the basic U.S. fiscal budget math,” Geithner said in his first public comments about the credit rating decision.

-Says a guy who claims he was completly stymied by the complexities of Turbo-Tax.

So late Sat night I overhear an old friend saying how his new GF’s tenants aren’t paying rent and won’t leave, so she’s thinking of letting the thing go back to the bank because she can’t make the payment. She bought at the height of the market, and he is telling her OMG it’s a house in the Bitterroot, don’t let it go back! He’ll help with the mortgage..besides she still has a house in LA that is *worth* 800k!

FB’s everywhere, as far as the eyes can see.

everyone ready for the financial porn today?

“Treasury Secretary Timothy Geithner says the credit rating agency Standard & Poor’s showed ‘terrible judgment’ in lowering the U.S. government’s credit rating. Geithner said the agency’s decision showed a “stunning lack of knowledge” about the basic math used to develop the federal budget.”

Mr. Geither, you’ve given the President some very bad advice. This is just a financial crisis and short term recession. It is the collapse of a debt driven economy that has been building, other than a few years after George HW Bush broke his no tax pledge and actually cut spending, for 30 years.

Federal debt. State and local debt. Retirement promises made but not paid for. Credit card debt. Second mortgage and HELOC debt. Private equity buyout debt. Derivative debt.

Thirty years of current account deficits. This was going to collapse, is going to collapse, and all your efforts have only delayed the collapse at great cost to the government.

America’s Great Unwinding… Decades in the making yet millions upon millions just can’t grasp what brought “it” about, including the dunces in D.C. Sadly all they are doing is making it worse.

ITEM: America’s Fiscal Rot Set in Years Ago: HSBC
Monday, 8 Aug 2011 | CNBC EMEA Head of News

The US fiscal position is messy, and steadily getting worse, according to HSBC chief economist Stephen King.

“The downgrade by S&P, the ratings agency, merely confirms what everyone already knew. The symbolism, however, is mightily important,” King wrote in a research note Monday.

Whilst the battle over the debt ceiling [cnbc explains] has grabbed the headlines in recent months, King believes it did little to address the real problems facing the US.

“Even before the financial crisis, the fiscal path was unsustainable: an ageing population combined with extravagant social security commitments suggested either the need for massive tax increases or draconian spending cuts,” said King.

The downgrade does put pressure on the US to act according to Jan Poser, chief economist at Sarasin in Zurich.

“The most important consequence of the US rating downgrade is the fact that US economic policymakers now have their backs to the wall. They are forced to make savings,” Poser wrote in a note on Monday.

“On the other hand, the need to economize means that fiscal policy to prevent another downturn will drop out of the picture. Monetary policy, which does not appear very effective at the current interest rate level, will bear the full burden.”

“As a consequence, poor macro data releases are likely to make investors more nervous than was hitherto the case,” he added.

Following the financial crisis which started 4 years ago, the US fiscal position has got much worse, and is now far worse than in crisis hit Europe according to King.

The US federal, state and local government deficit jumped from 2.9 percent of GDP in 2007 to 10.6 percent, and the ratio of debt to GDP jumped from 62 percent to 93 percent in 2010, according to OECD figures.

The euro [EUR=X 1.4171 -0.0213 (-1.48%) ] zone’s average deficit of 6.0 percent of GDP, a primary deficit of 1.1 percent of GDP and debt/GDP ratio about the same as America’s is “nothing like as bad” and “rising nowhere near as quickly” said King.

Poser believes the debt story is now all about the data and not about the politics.

“In the event of a more severe economic downturn, debts would rise with or without fiscal countermeasures and trigger a further downgrade. Hence, economic data will play a more important role than the political debate,” said Poser.

Obama Admin. to push waivers to NCLB requirements without waiting for Congress to act.

“(Education Secretary Arne) Duncan has warned that 82 percent of U.S. schools could be labeled failures next year if No Child Left Behind is not changed. Education experts have questioned that estimate, but state officials report a growing number of schools facing sanctions under the law.”

Can’t meet the standard? Then we obviously need to lower the bar. And of course throw more money at the problem.

“This Congress faces real challenges reaching bipartisan, bicameral agreement on anything,” said Sen. Tom Harkin, D-Iowa, in a written statement. “Given the ill-advised and partisan bills that the House majority has chosen to move, I understand Secretary Duncan’s decision to proceed with a waiver package to provide some interim relief while Congress finishes its work.”

Gosh, did Harkin say that when the ill-advised and partisan Obamacare bill was working its way through the House?

. Simple Math

U.S. income: $2,170,000,000,000
Federal budget: $3,820,000,000,000
New debt: $ 1,650,000,000,000
National debt: $14,271,000,000,000
Recent budget cut: $ 38,500,000,000

Mind boggling numbers, to be sure.
But remove eight zeros and look at them as
a family budget.

Total annual income for the Jones family: $21,700
Amount of money the Jones family spent: $38,200
Amount of new debt added to the credit card: $16,500
Outstanding balance on the credit card: $142,710
Amount cut from the budget: $385

U.S. Can’t Default
As long as its paper supply holds out.

“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default” said former Federal Reserve Chairman Alan Greenspan on NBC’s Meet the Press.

← The U.S. doesn’t really have to run the currency printing
press to meet its obligations, thanks to the efficient world of
digital money!
However, this method of clearing debt would destroy the
purchasing power of the dollar, just as it did in the 18th century
when the Continental dollar went kaput. Greenspan knows the truth.

offtopic question:

i need a home accounting/finance/budget software and was wondering what any of you would suggest.

i am thinking of getting quicken mainly becuase i used it years ago.

any other suggestions or experiences would be appreciated. it would be cool to find one that works with an Iphone app too.

thanks for your time.

AIG sues BofA for $10 billion alleging “massive fraud”

NEW YORK (Reuters) - The insurer AIG is suing Bank of America Corp to recover more than $10 billion of losses from a “massive fraud” on mortgage debt, deepening the morass of litigation faced by the largest U.S. bank.

American International Group Inc, still largely owned by taxpayers after $182.3 billion of government bailouts, is the latest of a growing number of investors filing lawsuits to hold banks responsible for losses on soured mortgages that contributed to the financial crisis.

The AIG complaint accuses Bank of America and its Countrywide and Merrill Lynch units of misrepresenting the quality of mortgages placed in securities and sold to investors. AIG said it suffered its losses on $28 billion of investments.

“Defendants were engaged in a massive scheme to manipulate and deceive investors, like AIG, who had no alternative but to rely on the lies and omissions made,” said the complaint, being filed in the New York State Supreme Court in Manhattan.

This won’t even get interesting until we reach, wait for it…

Dow 10,000!

Krugman, et. al. say that we need to keep government spending to encourage an economic recovery, and to ignore the debt. That the only important number is the Debt-to-GDP ratio. If that stays low, we’re fine.

I started thinking about the numbers. Say US debt used to be at a sustainable level - say 10% of GDP. Now, it’s closing in on 100% of GDP. How long would it take us, at 5% GDP growth and zero debt growth, to get back down to 10% of GDP.

Answer: 47.5 years.

Is Greenspan honest to goodness this clueless? First with the “financial markets will regulate themselves” silliness, and now, “No Chance of Default, US Can Print Money” claim?

It is pure sophistry to suggest the US can’t default because it can print money. It avoids the actual concern that the US will not deliver the value promised due to currency debasement.

The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default” said Greenspan on NBC’s Meet the Press

http://www.cnbc.com/id/44051683

West Palm Beach firm rolls out a new loan modification for underwater borrowers

By Kimberly Miller Palm Beach Post Staff Writer
Posted: 7:44 a.m. Monday, Aug. 8, 2011

WEST PALM BEACH — Lenders have long resisted cutting loan amounts for struggling homeowners, fearing it would entice more borrowers to default.

But one locally based servicer, Ocwen Financial Corp., believes it has found a solution.

The company is rolling out a new loan modification plan for underwater borrowers that lowers the amount owed on the loan - thus reducing the monthly payment - but asks for a share in the appreciated value when the house is either sold or refinanced.

The kickback to the lender may deter people who can afford to make their payments from defaulting, while giving an incentive to either the lender or investor to modify the loan.

Called a shared appreciation modification, it’s fairly simple on its face.

A home’s principal amount is reduced to 95 percent of the current market value. That portion is forgiven in equal amounts over a three-year period as long as the owner stays current on the loan.

When the house is later either sold or refinanced, the homeowner must give the lender 25 percent of the appreciated value of the home.

For example, say the principal balance on a loan is $125,000, but the current value of the home is only $100,000. Ocwen’s plan would reduce the balance to $95,000, putting $30,000 in a non-interest-bearing account that will be forgiven over a three-year period.

If the house is later sold for $120,000 - marking an appreciation of $20,000 - the homeowner would get to keep $15,000, while $5,000 would go to the lender. If the home doesn’t appreciate, then the sale occurs as it normally would.

“You have folks breaking their necks to make payments on a home where there is no hope in their lifetime of it regaining equity,” Koches said. “A homeowner in a negative equity situation is one-and-a-half to two times more likely to go into delinquency.”

“We’ve felt for a long time that unless you do principal write-downs, you really aren’t getting at the problem,” Day said. “It’s in everyone’s best interest to keep a credit worthy person in their home.”

Diane Thompson, an attorney with the National Consumer Law Center, is optimistic that Ocwen’s plan will work for many borrowers. But she has concerns that it isn’t enough for people whose home purchase was based on fraudulent appraisals that artificially hiked the value of a home.

“People who were ripped off should get more than shared appreciation or principal write-down,” she said.

http://www.palmbeachpost.com/money/real-estate/west-palm-beach-firm-rolls-out-a-new-1710729.html - -

I wonder if any other states rely heavily on big nanny?

~ Georgia stands to
 lose in debt plan
The Atlanta Journal-Constitution

Georgia has increasingly used federal funding to pay for state services, but that strategy may backfire now that the president and Congress have approved a debt reduction plan.

The state government’s $37 billion overall budget is propped up with about $11 billion in federal funding, which goes towards everything from health care for the poor to historic preservation. Federal tax money has helped avoid bigger state and local government layoffs than the state has already made.

State officials know the debt deal approved last week will likely mean major cutbacks in how much money they receive from the federal government. They just don’t know when the hit will come, how much it will be, and which programs will be affected by the decision by Congress to slow the flow from the federal spigot.

“Every chance we could, we switched state [program] funds to federal funds in the budget,” said Senate Appropriations Chairman Jack Hill, R-Reidsville. “It threads its way all through our budget. Whether it’s short term or long term, cutbacks are going to touch states and they are going to touch us. Yeah, it’s scary.”

But Kelly McCutchen, president of the free market Georgia Public Policy Foundation think tank, said state services have survived past cuts in federal funding, such as the elimination this year of economic stimulus money.

“We don’t believe that the concerns with state funding should stand in the way of getting the federal government’s fiscal house in order,” he said.

Newsflash: Flash Crash is imminent.

…this one could be a 2k point drop.

Just a hunch.

Jim Rogers: Don’t See How US Can Ever Pay Off Debts
Sunday, 7 Aug 2011 | CNBC Asia

The U.S. doesn’t deserve a AA-plus credit rating, much less triple-A, commodity bull and noted investor Jim Rogers told CNBC on Monday.

Rogers said the country was unlikely to be able to pay off its debt and Standard and Poor’s rating cut had come too late and should have happened long ago.

“It seems to me it’s physically, humanly impossible for the U.S. to ever pay off its debt [cnbc explains] ,” Rogers said. “They can roll it over and continue to play the charade, but the U.S. is bankrupt.”

Rogers’ comments came during a CNBC interview with the head of sovereign ratings at Standard and Poor’s, David Beers.

Beers said that according to S&P’s calculations, total U.S. public debt, which includes local, state and federal government debt, will be $11 trillion this year, and will rise to $14 trillion in 2015 and to $20 trillion by 2021.

To put those numbers into perspective, according to the U.S. government’s Bureau of Economic Analysis, U.S. annual gross domestic product (GDP) totaled $15 trillion in the second quarter of 2011.

Rogers, who has been critical of the U.S. economic policies for some time, said he remains short 30-year Treasurys [cnbc explains] , emerging markets and U.S. technology stocks but was long safe havens such as the Swiss franc, the yen and the dollar.

Rogers said he was also long commodities, especially gold and agriculture, and accepted that some of his long commodity positions may suffer in a selloff. Still, he won’t be selling.

“You should nearly always buy into panic just like you should sell hysteria,” Rogers said. “I own gold, I’m worried about gold, it’s going so up so much, I’m not going to sell it but it looks like it’s setting itself up for a nice correction. I hope so then I can buy more.”

30,000 college students kicked out of food aid program in Michigan
State’s new eligibility rules to save $75M; more students got aid than thought. - From The Detroit News

Lansing — Michigan has removed about 30,000 college students from its food stamp program — close to double the initial estimate — saving about $75 million a year, says Human Services Director Maura Corrigan.

Federal rules don’t allow most college students to collect food stamps, but Michigan had created its own rules that made nearly all students eligible, said Brian Rooney, Corrigan’s deputy director. As a result, the number of Michigan college students on this form of welfare made the state a national leader. For example, Michigan had 10 times the number of students on food stamps as either Illinois or California, Rooney said.

Cutting off the students is part of what Corrigan says is an effort to change the culture of the state’s welfare department and slash tens of millions of dollars of waste, fraud and abuse.

“Maybe (students) could go get a part-time job — that’s what I did,” said Corrigan, a former justice of the Michigan Supreme Court who attended Detroit’s Marygrove College and University of Detroit Mercy School of Law.

“We want to encourage people to be self-sufficient, not to be dependent on the government,” she said in an interview with The Detroit News.

But critics say state funding has shrunk and tuition has skyrocketed since Corrigan attended college in the late ’60s and early ’70s. They cite Michigan’s still-battered economy and say the suffering the cuts will create won’t be apparent until after cash-strapped students return to campuses this fall.

Corrigan, appointed by Republican Gov. Rick Snyder in January to head the $6.9 billion Department of Human Services, has also ordered administrators to start looking at applicants’ assets, not just their income. That move follows an uproar after it was revealed Leroy Fick of Auburn remained eligible for food stamps and continued using them after he won $2 million in the state lottery TV show “Make Me Rich!” in June 2010.

The DOW is holding up nicely today.

“Boycott ‘em!” (& their Fee$ible Opinion$)

S&P is a bad joke
By Jonathan Bernstein / Washington Post

This is about the rating agency, not the US budget or political system. For those who believe that this downgrade had anything to do with the federal budget situation and actual debt levels: c’mon, get serious. S&P made a political argument, not an economic one. Besides, the “Obama Downgrade” really makes no sense; after all, Obama had a lot more to say about budgets and deficits in 2009-2010, and there wasn’t even a hint of a downgrade then. Now, it is true that electing a whole bunch of Republicans who (rhetoric notwithstanding) are far more interested in low tax rates than they are in the deficit probably is correctly assessed as harming future fiscal balance, but it’s hard to see how that’s Barack Obama’s fault.

$tandard & knotPoor, one of the three main credit-rating agencies, “True$editionist$$erialEnabler$™”

Has S&P grown a pair, or are they just covering their a$$ as the downdraft picks up speed?

S&P Lowers Fannie, Freddie Citing Reliance on Government

(Bloomberg) — Standard & Poor’s lowered credit ratings for Fannie Mae, Freddie Mac, and other lenders backed by the federal government. The U.S.-sponsored mortgage finance companies were lowered one step from AAA to AA+, and S&P said the downgrade reflects the companies’ “direct reliance of the U.S. government.” S&P lowered the U.S. credit rating on Aug. 5. (Source: Bloomberg)

Standard & Poor’s lowered credit ratings on debt issued by Fannie Mae, Freddie Mac, and other lenders backed by the federal government, citing the U.S. loss of its AAA status.

The mortgage finance companies were lowered one step from AAA to AA+, S&P said in a statement today. The downgrade reflects their “direct reliance on the U.S. government,” S&P said.

Fannie Mae and Freddie Mac were placed into government conservatorship in September 2008 as losses tied to subprime mortgage lending pushed them toward insolvency. Since then, the two government-sponsored enterprises, or GSEs, have drawn almost $170 billion in federal aid. The GSEs own or guarantee more than half of U.S. mortgage debt.

The downgrades of Washington-based Fannie Mae, Freddie Mac of McLean, Virginia, and other government-backed debt was predicted by some analysts after S&P lowered the U.S. sovereign credit rating by one level on Aug. 5. On Friday, banking regulators including the Federal Deposit Insurace Corp. said that government-issued securities would be “unaffected” by the sovereign downgrade.

Yields on GSE bonds jumped to their highest relative to U.S. Treasuries in more than two years. The downgrade was only part of the reason for the wider spreads, said Walt Schmidt, a mortgage strategist in Chicago at FTN Financial, in a note to clients. He said the spreads are “based on uncertainties regarding prepayments and supply, not credit-based downgrade fears.”

Is the U.S. Credit Rating a Victim of GOP Sabotage?

By Daniel Gross is economics editor at Yahoo! Finance.| Contrary Indicator – Fri, Aug 5, 2011

The fiscal clown show continues.

It has long been obvious to all observers — to economists, to politicians, to anti-deficit groups, to the ratings agencies — that closing fiscal gaps will require tax increases, or the closure of big tax loopholes, or significant tax reform that will raise significantly larger sums of tax revenue than the system does now. Today, taxes as a percentage of GDP are at historic lows. Marginal rates on income and investments are at historic lows. Corporate tax receipts as a percentage of GDP are at historic lows. Perhaps taxes don’t need to rise this year or next, but they do need to go up in the future.

Otherwise, the math of deficit reduction simply doesn’t work. And that’s how the deficit reduction deals signed off on by Repubican presidents like Ronald Reagan and George H.W. Bush came about.

Yet the action in Washington in the past year has all gone in the opposite direction. President Obama deserves some of the blame. Several months ago, he struck a deal with Congress to make the fiscal situation worse — extending the Bush $hrub tax cuts Gift$ for two more years and enacting a temporary cut in the payroll tax.

But Congressional Republicans deserve much more of the blame. For this calamity was entirely man-made – even intentional. The contemporary Republican Party is fixated on taxes. It possesses an iron-clad belief that the existing tax rates should never go up, that loopholes shouldn’t be closed unless they’re offset by other tax reductions, that the fact that hedge fund managers pay lower tax rates than school teachers makes complete sense, that a reversion to the tax rates of the prosperous 1990’s or 1980’s would be unacceptable.

In the past two years, this attitude has combined with a general hostility to playing ball with Democrapts on large legislative issues, a near-blanket refusal to conduct business with President Obama, and, since the arrival of the raucous Tea Party freshman, a cavalier attitude toward the nation’s obligations. It was common to hear duly elected legislators argue that it wouldn’t be a big deal if the government were to pierce the debt ceiling and default on its debts.

With S&P downgrading Fannie and Freddie this morning, what will that mean to us home buyers who are waiting for the right house to show up?

Higher interest rates?
Underwriting standards tightened some?
Lower prices with more inventory?

Realology(sp?) the owner of the Coldwell Banker and C21 franchises wants a Housing Summit in the WH. (I read this as no freakin inventory=they’re sinking) They want the banks to release some inventory.

Are things lining us for us buyers by fall?

I notice Lurch Kerry has been out whining and crying more than usual…

Democrats seek to pin credit downgrade on tea party
Partisan gridlock is real culprit, S&P says (Associated Press)

While continuing to cast doubt on the credibility of Standard & Poor’s, several Democrats on Sunday said there is an even greater culprit in the downgrade of the nation’s credit rating: the tea party.

“I believe this is, without question, the tea party downgrade,” Sen. John F. Kerry, Massachusetts Democrat, said on NBC’s “Meet the Press” on Sunday, a day that also saw mounting anxieties in world markets over the downgrade among myriad other economic woes worldwide. Some of the world’s top financial ministers issued a joint statement Sunday night committing themselves to preserve the stability of financial markets and their economies.

David Axelrod, a former senior adviser to President Obama, used the exact same phrase in dubbing the credit rating drop the “tea party downgrade,” as Democrats tried to position themselves as reasonable, pragmatic leaders and conservative Republicans as irresponsible ideologues who caused the downgrade by refusing to accept any new taxes.

That’s exactly the kind of blame game that led Standard & Poor’s, one of three key credit-ratings agencies, to strip the U.S. federal government of its AAA status Friday night and reducing it to AA+ for the first time in the nation’s history.

“Congress and the administration are jointly responsible for the conduct of fiscal policy. So, this is not really about either political party,” David Beers, the head of S&P’s government debt-rating unit, said during an appearance on “Fox News Sunday.”

Obama speech delayed…

Rome burns, while Barry takes a $hit.

When they have more panic about a drop in the Dow to the point where the President must speak soon ,rather than panic when the job loss numbers come out bad ,than you know the priorities of
this Nation are retarted . Again I say ,you can’t have a economy that revolves around investments and bubbles rather than jobs and
production.

For once I have to agree with this old windbag. Ron Paul has been saying this for years.

Dem: US credit down because of military spending

WASHINGTON (AP) — The senior Democrat on the House Financial Services Committee says the biggest reason the United States is seeing its credit downgraded is that it spends too much money being “the military policemen of the world.”

Rep. Barney Frank tells CBS’s “The Early Show” that reining in defense spending is “going to be my mantra” for the next few months.

The liberal Massachusetts Democrat says $200 billion could be saved “without in any way endangering our security” by dialing back U.S. military involvement in the world, including operations in Western Europe. Frank says the military establishment has always had this “great momentum” in politics, but says the credit reversal “could change our thinking.” Frank calls the military a logical target “if we’re looking for something that breaks the mold” on spending.

Weiss Ratings Credits S&P for Important First Step;
Renews Challenge to Moody’s and Fitch to Downgrade U.S. Debt

JUPITER, Florida (August 8, 2011) — Weiss Ratings, the nation’s leading independent rating agency of U.S. financial institutions, credits Standard & Poor’s for taking an important first step in the right direction, while renewing its public challenge to Moody’s and Fitch to downgrade the long-term debt of the U.S. government.

The Weiss Ratings Challenge, reissued today, was initially made to all three credit rating agencies on May 10, 2010, or 15 months before S&P announced its downgrade of U.S. debt from AAA to AA+ last Friday.

Weiss Ratings president Dr. Martin D. Weiss commented: “S&P deserves credit for breaking with nearly a century of precedent and focusing the world’s attention on the urgency of this problem. However, we do not believe a one-notch downgrade adequately reflects the rapid deterioration of the nation’s finances since the debt crisis of 2008.”

Although a downgrade can have negative short-term repercussions, Weiss believes the consequences of procrastination can be far more serious, while an honest rating can be constructive for the country in the long term. Addressing the major credit rating agencies, he wrote:

“To the degree that you continue to reaffirm stellar ratings for U.S. debt, you help entice millions of hard-working citizens, retirees, and their intermediaries to pour more money into a potential debt trap; or at best, to be severely underpaid for the actual risks they are taking. You give policymakers a green light to perpetuate their fiscal follies, further degrading our government’s ability to meet future obligations. And you help create a false sense of security overall — the recipe for a possible meltdown in the market for U.S. sovereign debts.”

On April 28, 2011, 15 months after issuing its initial challenge to the major ratings agencies, Weiss Ratings introduced the Weiss Sovereign Debt Ratings, giving the United States a grade of C, and subsequently, with its release of July 15, 2011, Weiss Ratings downgraded U.S. debt to C- (approximately equivalent to a BBB- at S&P).

Weiss Ratings senior financial analyst Gavin Magor commented: “The U.S. is facing some of its greatest financial challenges of modern times, while global investors continue to take very substantial risks when buying medium- and long-term U.S. government securities. These include the risks of currency devaluation, reduced bond market liquidity, bond price declines, and rapidly escalating costs of insuring against a possible future default.”

Today, Weiss Ratings reaffirmed its C- rating of U.S. medium- and long-term debt. Among the 49 sovereign nations covered, the United States continues to score very low in terms of its debt burdens, macro-economic trends, and international stability, while still getting a relatively high grade for the broad acceptance and marketability of its debt securities.

About Weiss Ratings:
Weiss Ratings is the nation’s leading independent provider of bank, credit union and insurance company financial strength ratings, accepting no payments for its ratings from rated institutions. Weiss Ratings also provides debt ratings on 49 sovereign nations.

“Could be” Nope, it will be.

- Second Recession in U.S. Could Be Worse Than First
nytimes

If the economy falls back into recession, as many economists are now warning, the bloodletting could be a lot more painful than the last time around.

Given the tumult of the Great Recession, this may be hard to believe. But the economy is much weaker than it was at the outset of the last recession in December 2007, with most major measures of economic health — including jobs, incomes, output and industrial production — worse today than they were back then. And growth has been so weak that almost no ground has been recouped, even though a recovery technically started in June 2009.

“It would be disastrous if we entered into a recession at this stage, given that we haven’t yet made up for the last recession,” said Conrad DeQuadros, senior economist at RDQ Economics.

When the last downturn hit, the credit bubble left Americans with lots of fat to cut, but a new one would force families to cut from the bone. Making things worse, policy makers used most of the economic tools at their disposal to combat the last recession, and have few options available.

Anxiety and uncertainty have increased in the last few days after the decision by Standard & Poor’s to downgrade the country’s credit rating and as Europe continues its desperate attempt to stem its debt crisis.

President Obama acknowledged the challenge in his Saturday radio and Internet address, saying the country’s “urgent mission” now was to expand the economy and create jobs. And Treasury Secretary Timothy F. Geithner said in an interview on CNBC on Sunday that the United States had “a lot of work to do” because of its “long-term and unsustainable fiscal position.”

But he added, “I have enormous confidence in the basic regenerative capacity of the American economy and the American people.”

Explosive Jackie O tapes ‘reveal how she believed Lyndon B Johnson killed JFK.

Former first lady Jackie Kennedy is said to have made the tapes within months of JFK’s assassination

Jackie Onassis believed that Lyndon B Johnson and a cabal of Texas tycoons were involved in the assassination of her husband John F Kennedy, ‘explosive’ recordings are set to reveal.

The secret tapes will show that the former first lady felt that her husband’s successor was at the heart of the plot to murder him.

She became convinced that the then vice president, along with businessmen in the South, had orchestrated the Dallas shooting, with gunman Lee Harvey Oswald – long claimed to have been a lone assassin – merely part of a much larger conspiracy.

Texas-born Mr Johnson, who served as the state’s governor and senator, completed Mr Kennedy’s term and went on to be elected president in his own right.

The tapes were recorded with leading historian Arthur Schlesinger Jnr within months of the assassination on November 22, 1963, and had been sealed in a vault at the Kennedy Library in Boston.

The then Mrs Kennedy, who went on to marry Greek shipping tycoon Aristotle Onassis, had ordered that they should not be released until 50 years after her death, with some reports suggesting she feared that her revelations might make her family targets for revenge.

She died 17 years ago from cancer aged 64 and now her daughter, Caroline Kennedy, has agreed to release the recordings early.

Read more: http://www.dailymail.co.uk/news/article-2023418/Jackie-O-tapes-reveal-JFKs-affairs-believed-death.html#ixzz1USp6Gxqu

Do you guys think we will default?

The NYSE is getting it’s butt cut this afternoon.

Center City Philadelphia, City of Philadelphia, Curfew, Flash Mobs, KYW

PHILADELPHIA (CBS) - Mayor Michael Nutt today announced a tighter weekend curfew in the Center City and University City regions of the city, as he continues grappling with the threat of “flash mobs” in Philadelphia.

Nutter today described those engaging in flash mob rampages as “a tiny minority of ignorant, reckless fools.”

Then, flanked by dozens of law enforcement and community leaders, he spelled out a substantive (though temporary) change in the city’s curfew for two key areas — Center City and University City — on Friday and Saturday nights.

Anyone under 18 in those areas must now be off the streets by 9 PM.

And when parents come to pick up curfew violators, the mayor said, they’ll be told to keep track of the child.

“If you don’t even bother to pick up your child, we are immediately calling the Department of Human Services, and you can then be taken to court for other violations including neglect of your child,” he warned.

“What Obama fails to understand, and it means he’s a 1-term president, is that the markets are rigged. So saying that ‘markets believe we’re still AAA’ is like saying the tooth fairy is real. To say Obama’s delusional does not even begin to address the problem”. -Max Kieser

Obama: “No Matter What Some Agency May Say, We’ve Always Been And Always Will Be A ‘Triple-A’ Country” (BI)

President Barack Obama addressed the S&P downgrade in a statement to the American people Monday, saying “no matter what some agency may say, we’ve always been and always will be a AAA country.”

He called the action by S&P “a warning” and called on the “Super Committee” on deficit reduction to reach a compromise on reforming taxes and Medicare.

Obama added that the downgrade was a reflection of the ratings agency’s doubt in “our political system’s ability to act” to rein in growing deficits.

He called on Congress to quickly pass an increase to the payroll tax cut set to expire next month, warning it could cost as many as 1 million jobs.

S&P downgrades roll on: Insurers whacked

NEW YORK (CNNMoney) — The credit ratings of five major insurance companies were whacked by Standard and Poor’s on Monday as the rating agency systematically downgraded debt that is closely linked to the federal government.

The latest victims are insurers Knights of Columbus, New York Life, Northwestern Mutual, Teachers Insurance & Annuity Association of America and United Services Automobile Association.

The ratings were moved from AAA to AA+, and S&P assigned a negative outlook, which means another downgrade could take place in the next few years. (Read: Treasuries are safe. Sorta)

At the same time, S&P affirmed the AA+ rating on Assured Guaranty (AGO), Warren Buffett’s Berkshire Hathaway (BRK.A), Guardian, Massachusetts Mutual and Western & Southern — but lowered their outlook from stable to negative.

You can bet the howls for QE-3 will be out in full force now!

A flash mob is cool and entertaining everywhere but in Philly. I am embarrassed for my city of brotherly…love?

Legal Aid of NC closing 3 offices and cutting 30 positions
newsobserver.com

Facing budget cuts of more than $2 million, Legal Aid of North Carolina plans to eliminate about 30 positions and close its offices in Smithfield, Boone and Henderson by the end of September.

Those three offices have served about 2,000 households a year in Johnston, Harnett, Sampson, Allegheny, Ashe, Avery, Mitchell, Watauga, Wilkes, Vance and Yancey counties.

The nonprofit looked at furloughs and salary cuts but the reductions in funding were too great, said George Hausen, Legal Aid of North Carolina’s executive director.

Legal Aid’s total budget had been around $20 million a year before the cuts.

By closing rural offices, Legal Aid hopes to maximize the number of poor people it serves at its current funding level.

“We serve poor people, and in the rural areas we have to travel a much greater distance to serve fewer people,” Hausen said. “In order to keep the numbers high and serve as many poor people as we possibly could we decided that we needed to circle the wagons in the big, urban offices.”

Legal Aid of North Carolina has about 150 lawyers on staff who assist more than 40,000 low and moderate-income households with various legal matters each year. In recent years, the organization has been heavily involved in providing mortgage assistance to people facing foreclosure.

Those programs have been spared from cuts, Hausen said.

Legal Aid gets its funding from a range of sources, but its biggest sources are the state and federal governments, which have been cutting spending in a range of areas. Some of Legal Aid’s funding is also tied to commercial real estate transactions, which are down significantly in recent years.

The cuts come at a time when there is increased demand for Legal Aid’s services as a result of the economic downturn.

“Even under the best funding that we had we’re still turning away over half the clients who apply to us with good cases,” Hausen said. “We have a burgeoning poverty population here in North Carolina and we’re cutting these services at a very critical time.”

So when they launch the QE-3 how large should she be? $3 to $5 trillion?